Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Image Shown: Magellan Midstream is focusing heavily on growing its fee-based operations, with an eye towards expanding its refined products pipeline segment. Image Source: Magellan Midstream Partners L.P. – August 2019 IR Presentation. 

If you may wish to add the High Yield Dividend Newsletter to your membership, please click here.

We continue to like Magellan Midstream as a holding in our High Yield Dividend Newsletter portfolio. The company’s investment grade credit ratings (BBB+/Baa1 as of August 2019) and preference to fund its growth trajectory with debt instead of equity (equity issuances have been very muted since 2010) allows for steady sustainable increases in the company’s per unit distribution. Magellan Midstream retains access to capital markets at attractive rates and will likely take advantage of the subdued interest rate environment by refinancing portions of its existing debt load at lower rates when able. Magellan Midstream’s quarterly distribution per unit has grown by almost three-fold since the start of 2010, and there’s room for additional payout increases over the coming years.